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Tuntland Calls Defendant Gjovig

November 8, 2010

Tuntland
examines Gjovig.

Board
member 2002-2008. Was on audit
committee. Said that Long had emailed
several emails to the board that he had directed to interim CEO Halvorson. Said he remembered Long had emailed his
appeal packet before they received the hard copy. He remembered that boards member Grossbauer
and Curl complained they did not have enough time to review Long's
materials. Gjovig thought since
Grossbauer was not on the board when the events took place, his opinion didn't
matter. Plus Grossbauer had befriended
Long. He expected Terry Curl would
support Long because he supports labor and thought he would support someone who
was losing his job. He decided this
thing had dragged on long enough, there had been alot of press, and they needed
to resolve it immediately. He noted that
Curl and Grossbauer did not make a motion to ask for more time.

Tuntland: Under your Carver model of board governance,
an employee with problems would go to their supervisor and then through the
chain of command?

Gjovig: Correct.

Tuntland: The chain ends with the CEO?

Gjovig: Correct.

Tuntland: If you suspected the CEO of illegal activity,
you are not authorized to go to the board?

Gjovig: That would be correct at that time, but he
did it anyway, he was heard.

Tuntland: He was not allowed to speak, was he?

Gjovig: No.

Gjovig
said he was upset that Armstrong's journal taken and that played into his
decision not to reinstate Long. He also
cited his complaints regarding Peltz.

Gjovig
acknowledged that the search of Mark Armstrong's office resulted in the search
warrant for his journal, but in his opinion that didn't matter.

Tuntland: Did you read the journal?

Gjovig: Yes.

Tuntland: If the journal said the CEO had been stealing
thousands of dollars, wouldn't you care?

Gjovig: I'd care, but under the Carver model we
trusted the CEO to run the business. The
governance model said only reach in if it's something of danger to the
business.

Tuntland: Regarding danger to the business, WSI was
transforming it's software and Jim had concerns about the project being
interrupted, didn't he?

Gjovig: Yes.

Tuntland: This was an 8 million dollar project,
correct?

Gjovig: Yes.

Tuntland: Jim was concerned about bringing the project
in on time and under budget?

Gjovig: Yes.

Tuntland: He was fired for being concerned about
bringing the project in on time and under budget?

Gjovig: No. No
way. From the moment he did not get the
CEO job, he went on a path of destruction.
He ruined his chance of returning to the job. He went to the press and said we weren't
handling claims properly. He never
handled claims.

Tuntland: Do I have to have a background in handling
claims to know that it's wrong for the insurance company to appoint the person
who determines claims?

Gjovig: (stammers)

Tuntland: It worked pretty well for the employers.

Tuntland
established that the board had 6 members favoring employers and 5 members
favoring employees, but Gjovig said if you brought in all the board members
everyone would say taking care of injured workers was a priority.

Tuntland: Employer premiums went down and denial rates
went up, true.

Gjovig: Not sure, but that's not why he was
suspended. He was suspended for job
performance.

Tuntland: Are you aware Jim provided information to the
BCI before he was suspended?

Gjovig
said he could not remember the date and when asked if he could determine from
the letter that suspended Jim why he was suspended, he coudn't remember. Tuntland then read from the letter,
"Long's continued effectiveness was compromised." When Gjovig was asked why, he said he didn't
know from reading this but he thought Jim knew.
Tuntland pointed out the second part of the letter said WSI would
implement a process to re-evaluated his role, but Gjovig could not recall
whether there ever was such a re-evaluation.
Gjovig said his comments to the media really hurt Long. Tuntland asked what public statements had
Long made prior to receiving this letter which put him on suspension with
pay. Gjovig did not know the
timeline.

Gjovig
also said regarding the taking of Armstrong's journal, that Jim had said in one
place that he had taken in and at another place Grinsteinner had taken it, but
he thought the whole incident was out of bounds. He was fine with the search, but it should
have been done in broad daylight with Armstrong present. He thought that was justification for Long to
be suspended. In addition, he thought
his relationship with Peltz was enough to terminate him.

Tuntland: Were you aware that Long at the request of
the Bureau of Criminal Investigations had talked to BCI?

Gjovig: I don't recall.

Tuntland: Did you know that happened less than a month
before he was suspended?

Gjovig: I don't know, but it didn't matter.

Randy
Bakke then began his re-direct of Gjovig.

Bakke
established Gjovig had been a long term member of the audit committee. Gjovig said you needed to be on that
committee for three years to understand the complexity of workers compensation,
that there are some claims with a 21 years where that person could be on
workers comp for 45 years.

Gjovig
recalled a meeting with the Brady Martz accounting firm. He said Long was bantering with the
accountant and Gjovig thought him to be unprofessional, "I thought this
guy's an idiot." This occurred some
time after Sandy Blunt had been put on paid leave.

Gjovig
said that when Halvorson was appointed as interim CEO, he had to be talked into
the job, but that Long had been lobbying to get the job. In Gjovig's opinion, there was no comparison
between Halvorson and Long, that Halvorson was a walking bible regarding
workers compensation.

Gjovig
said that after Halvorson was appointed as CEO Long became disruptive to
WSI. He began talking to the press
saying claims were not properly handled.
He said Long could not handle the pressure and there's no way he would
work out. Bakke introduced minutes of a
board meeting on Halvorson's job performance as interim CEO which said he had
done an outstanding job under a difficult situation. Gjovig said when Long was on paid
administrative leave he was making comments to the media. In light of that, he thought it would be
devastating to WSI employees if Long were brought back.

Bakke
also noted emails sent by Long to Bjornson regarding Halvorson where Long
talked about misuse of public resources.
Gjovig felt these were disrespectful to Halvorson. These emails were copied to the board. Bakke established this was not the typical
chain of command to copy the board, that Long was to communicate with the
CEO.

It was
established that Governor Hoeven requested reports regarding the processes at
WSI. One was called the Marsh report
about claims handling where it was determined that injured workers were treated
properly. The other was the Connolly
report which evaluated internal administrative operations at WSI.

The
Connolly report stated that Long's position as Director of Support Services was
no longer needed and the position should be eliminated. The Connolly report also compared WSI to
other workers compensation organizations and said WSI was well run and doing an
excellent job. The report said that WSI
had the lowest premium rates in the United States and that injured
workers surveyed showed high satisfaction rates with employer services.

Questioning
then turned to Kay Grinsteinner regarding her position as Internal Audit
Manager. Bakke established the WSI audit
committee had a set of bylaws which were signed by Grinsteinner, "Upon
discovery of potential fraudulent issues, Internal Audit Manager will turn over
to management or the board audit committee, will take the lead in fraud
investigation." Bakke established
Grinsteinner had not come to Gjovig as the internal audit chair to request
permission to search Armstrong's office.
Gjovig said he would not have given such permission because her task was
to audit. If she thought she found fraud
she was to take it to the audit committee.
Gjovig said the Connolly report stated that Grinsteinner did not have
authority to conduct that search. He
also said Grinsteinner did not have authority to pass information on to
Long.

Bakke
then produced an email Grinsteinner had sent to the state auditor regarding her
concern about the handling of medical claims. It was established that
Grinsteinner did not work in the claims department. The email to the state auditor had been
published outside the organization before the WSI board ever saw it. He said the Connolly report said that action
was grossly inappropriate and that Grinsteinner needed to be terminated. Bakke then produced what he called
Grinsteinner's dirty little secret email, where she said, "This is our
dirty little secret. How we are really
treating injured workers.", which had been sent to the state auditors
stating that she had found indications WSI was denying claims with the hopes
that claimants would not appeal. That
there was a 7% drop in the number of claims accepted and that the attorney work
product notes said they would have had a 10% chance of prevailing on legal
appeals. Gjovig said Grinsteinner had
attended just one meeting and took it out of context, that she may have been
looking at the number of claims filed in North
Dakota, perhaps 100,000, but there had been a
concerted effort by industry to improve safety conditions. After this email and the search of
Armstrong's office, Gjovig determined Grinsteinner need to be terminated.

The
Connolly report also looked at the human resources department and stated that
over the past 5 years that department was singularly unsuccessful in creating a
climate of fairness and trust or respect and gendering confidence of the
organization. It stated a quote from
Peltz that she did not feel she could walk into the CEO's office and tell him
how to do his job. Therefore, Gjovig
felt Halvorson had cause to terminate Peltz.

Bakke
then asked a question which would become familiar to the jury, "Was Long
terminated for reporting illegality or suspected violation of the law?",
to which Gjovig replied, no.

Long's
attorney, Tom Tuntland then began his cross-examination of Gjovig.

Regarding
Gjovig's comment that Long had bantered with Brady Martz, Tuntland asked
whether those who banter are idiots?
Gjovig said no, that it was just a one way conversation and that Jim was
taking shots at the guy.

Tuntland: You testified Long went down a path of self
destruction, but he started talking about WSI after his suspension by
Halvorson, correct?

Gjovig: Yes.

Tuntland: Wouldn't you think someone suspended with no
reason would want to know why?

Gjovig: Most of his discussion was about claims not
being paid. He had no knowledge.

Tuntland: Wasn't the basis of his claim that he had
been suspended because he had filed a whistleblower complaint?

Gjovig: He was in trouble and filed the whistleblower
complaint to protect himself.

Tuntland: Your opinion is that Jim Long went to Mike
Quinn at BCI to protect his own butt?

Gjovig: Don't know.

Tuntland: Jim Long gave Quinn Armstrong's journal to
protect his own butt?

Gjovig: That he participated in the search at all was
bad.

Tuntland: He'd been kicked out of the building less
than a month after he provided information about Sandy Blunt?

Gjovig: That's not why he was suspended.

Tuntland: Sandy Blunt wasn't kicked out of the
building?

Gjovig: Sandy
was suspended for political pressure and pressure from the media.

Tuntland: You said Grinsteinner was politically
motivated in doing what she did. What
politics motivated her?

Gjovig: Disrupting the organization to get changes
made.

Tuntland: What political motivation did Long have?

Gjovig: Not getting the job of CEO.

Tuntland: What politically motivated Long to go to BCI?

Gjovig: No idea.

Tuntland: The board voted to support Blunt because they
thought his prosecution was politically motivated? What politics motivated Richard Riha when he
prosecuted Sandy Blunt?

Gjovig: It played well in the press.

Gjovig: He was not terminated for filing a
whistleblower complaint.

Tuntland: Is it possible WSI dummied up a reason after
75 days to justify termination of Long?

Gjovig: No, there was plenty of fuel for the fire.

Gjovig
stated that Long was undermining Halvorson regarding the ITTP project. Tuntland established that Long went to the
board after talking to Halvorson and that the ITTP charter called for Long to
take whatever action necessary to keep the project on time and under
budget.

When
asked if Gjovig had personally checked reports about complaint regarding Long's
job performance, Gjovig said he wasn't lacking in that but that he couldn't
work with the management team. He was
not the same person after Halvorson got the CEO job.

Tuntland
then turned to the Connolly report regarding human resources. "We believe WSI has installed workable
HR systems over the last several years to establish fairness." and "Former CEO's judgment on selection
of senior management has rendered HR ineffective in the eyes of
employees."

Tuntland: How is Peltz supposed to do her job when the
CEO is undermining an entire organization?

Tuntland
then turned to the Marsh report under the heading recommendations. The report stated WSI was achieving an 86%
compliance score. Tuntland said there
were 20,000 claims per year and that meant 2800 people had claims denied when
they should have been approved. Gjovig
said 14%, that doesn't mean that many were denied. Judge Goodman then interceded and asked, do
you know what that means? Gjovig replied
he was not sure what that meant.

There was
discussion over relative claims payouts.

Tuntland: It is the stated goal of workers'
compensation law that workers are guaranteed sure and certain relief. You're saying that if you're going to cut,
you'll cut the amount paid to injured workers.

Gjovig: No.
Injured workers come first.

Tuntland
established that Kay Grinsteinner is a CPA and that she had explained to Gjovig
that internal auditors had ethical standards to follow. He referred to the internal audit charter
which read, auditors are governed by the internal audit act for highest
professional standards, for accountability, and code of ethics.

Tuntland: So she told you she follows her code of
ethics in what she did?

Gjovig: She told me that, but she did not have
authority.

Tuntland: So you think the board can tell the attorneys
at WSI they can ignore their code of ethics?

Gjovig: No.
We're saying don't use your home email.

Tuntland: Grinsteinner told you she was searching for
the way Armstrong was handling Freedom of Information Act requests. That was part of her job, right?

Gjovig: No, not searching desks.

Tuntland: You said WSI provided safety grants. Blunt gave $150,000 grant without even having
an application in hand, correct?

Gjovig: I don't recall.

Tuntland: Grinsteinner, Peltz, and Jim Long were all
fired on the same day, right?

Gjovig: Yes.

Tuntland: They all filed whistleblower complaints?

Gjovig: Yes.

Randy
Bakke then began his re-direct of Gjovig.
He referred back to the Marsh report which stated that claims denials
met industry standards and that WSI was doing better then the entire industry. He also established that problems within
human resources did go back to the Blunt administration and it was fair to say
their was blame to go around, but also noted that Long was in charge of HR and
the Connolly report stated that HR was the last place employees would go to for
redress.

He
established if Grinsteinner thought she did not wish to adhere to WSI's
internal audit charter, she should not have signed it and that she never showed
Gjovig her supposed ethics policy.
Gjovig said they had a special audit committee meeting regarding her
accusations and when they went through them line by line, she started to back
down. Bakke then established that her
reports to the state auditors did not report "violations of the law".

Tuntland
then did his cross-examination. He
established that Gjovig had not asked Grinsteinner to provide the ethical rules
in question and that Grinsteinner had actually herself put the first bullet in
the WSI's internal audit charter that she had to follow ethical rules.

Gjovig: But common sense is not going into a desk in
the middle of the night.

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Sue Wilson tells important stories which move politicians to act. She is the Emmy winning director of the media reform documentary "Broadcast Blues" and editor of SueWilsonReports.com.
Broadcast Blues sets its sights on media policy, and www.SueWilsonReports.com turns a critical eye on the media itself.
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